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Investing Ideas: 5 Stocks Under $5 That Everyone's Crazy About

Do you think these stocks are bargains waiting to rally?

It's important to remember that buying stocks is just like any other purchase -- many investors buy when a stock rises and sell when a stock falls, but a rising price means a more expensive stock, and a falling price often means a bargain.

For a look at potential bargains, we ran a screen on stocks trading under $5 for those that the "big money investors" believe in.

Short-sellers and hedge fundsInstitutional investors like hedge fund managers and mutual fund managers have a lot of experience in choosing investments, and they have access to the most sophisticated research. If they're buying a stock, it's a signal to take a second look.

As for short-sellers, they are also considered very knowledgeable due to the stringent requirements and background checks they are held to (this is because short-selling involves large amounts of borrowing).

Investing ideasWe ran a screen on stocks trading under $5 for those seeing bullish sentiment from both short-sellers and institutions: decreases in shares shorted m/m as well as significant net institutional purchases over the current quarter.

Do you think these stocks are bargains waiting to rally? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases as a percent of share float. (Click here to access free, interactive tools to analyze these ideas.)

1. Affymetrix(Nasdaq: AFFX): Engages in the development, manufacture, sale, and servicing of consumables and systems for genetic analysis in the life sciences and clinical health care markets. Current price at $4.91. Net institutional purchases in the current quarter at 8.5M shares, which represents about 14.7% of the company's float of 57.87M shares. Shares shorted have decreased from 8.76M to 5.99M over the last month, a decrease that represents about 4.79% of the company's float of 57.87M shares.

2. Sify Technologies Limited(Nasdaq: SIFY): Provides enterprise and consumer Internet services primarily in India. Current price at $4.91. Net institutional purchases in the current quarter at 656.3K shares, which represents about 14.02% of the company's float of 4.68M shares. Shares shorted have decreased from 3.68M to 3.33M over the last month, a decrease that represents about 7.48% of the company's float of 4.68M shares

3. Central European Distribution(Nasdaq: CEDC): Produces, imports, and distributes alcoholic beverages in Poland, Hungary, and the Russian Federation. Current price at $3.22. Net institutional purchases in the current quarter at 5.1M shares, which represents about 8.25% of the company's float of 61.85M shares. Shares shorted have decreased from 10.50M to 9.81M over the last month, a decrease that represents about 1.12% of the company's float of 61.85M shares.

4. Standard Pacific(NYSE: SPF): Operates as a diversified builder of single-family attached and detached homes in the United States. Current price at $2.91. Net institutional purchases in the current quarter at 7.3M shares, which represents about 6.91% of the company's float of 105.61M shares. Shares shorted have decreased from 19.16M to 18.01M over the last month, a decrease that represents about 1.09% of the company's float of 105.61M shares.

5. Giant Interactive Group(NYSE: GA): Develops and operates online games in the People's Republic of China. Current price at $4.12. Net institutional purchases in the current quarter at 5.0M shares, which represents about 5.55% of the company's float of 90.17M shares. Shares shorted have decreased from 6.22M to 4.26M over the last month, a decrease that represents about 2.17% of the company's float of 90.17M shares.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

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Kapitall's Alexander Crawford does not own any of the shares mentioned above. Institutional data sourced from Fidelity, short data sourced from Yahoo! Finance.